CNOOC pledge small step for China transparency, sceptics abound

SINGAPORE/HONG KONG Dec 10 (Reuters) - CNOOC's promise of
transparency, pledged to win approval from Canada for its $15.1
billion purchase of Nexen Inc, looks like a positive step on the
face of it but is unlikely to represent a sea change in Chinese
business practices.

To be sure, the details of commitment are not clear. The
state-controlled energy firm has promised the Canadian
government an annual compliance report on all its commitments
that are part of its takeover of Nexen Inc, China's biggest ever
takeover. These include listing shares on Toronto stock
exchange, which comes with certain disclosure requirements.

But when capital is king, cash-rich Chinese state-owned
enterprises have the balance of power in any acquisition talks,
leaving doubts about the real potency of transparency pledges.

"On the transparency side, I believe there will be efforts
from foreign governments to get more information, but it's still
a question of how far China is willing to give," said Robert
Lewis, a partner at Zhong Lun law firm in Beijing.

"Twenty years ago it was all about foreign capital coming
into China and that foreign capital having the leverage in
negotiations. Now it's the other way round, so China will not
have to give as much on the transparency side as some might
suspect".

The international community has demanded greater
transparency from China on a number of fronts for years, wary of
its intentions as the country grew to become the second-biggest
economy in the world and symbolic of a shift in global power to
emerging nations.

On the latest front, U.S. securities regulators are in an
intense stand-off with their Chinese counterparts over access to
Chinese audit documents. Separately, a U.S. congressional
advisory panel described Chinese investment in the United States
as a "potential Trojan horse."

China's state-secrets laws, massive bureaucracy and cronyism
make it difficult to get key, verifiable information from
Chinese companies.
Continued...